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NPV Calculator

Net Present Value(NPV) Calculation

Net present value is one of most used measures for evaluating an investment. An investment with higher net present value is considered as more profitable than investment with lower net present value. This free online tool helps you to calculate NPV. You need cash flows of each period and discount rate on hand before doing the calculation.

Invalid value!

Example 1 | Example 2 | Example 3

Batch data entry (enter or paste your data in below box)

Discount rate(annually):

%

Initial invest - Year 0($, minus):

Year

Cash-In ($)

Cash-Out/
Investment ($, minus)

Net Cash Flow ($)

Discounted Cash Flow ($)

{{$index + 1}}

Total:

Net Present Value Results:

Net present value (NPV) is: $

Total cash-in is: $

Total cash-out is: $

Total net cash flow is: $

Total discounted cash flow is: $

Profitability index (PI)：

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What is PV(present value)

To better understand NPV(net present value), let's first look at what is present value(PV). PV is the current worth of a future amount of money. "A dollar today is worth more than a dollar tomorrow", this is referred to as the time value of money. A given amount of money today has different (usually higher or equal) buying power than the same amount of money in the future. In finance and investment, PV is used to evaluate the future cash flows.

PV formula

What is discount rate

Discount rate is a key factor to calculate present value of future cash flows properly. The higher the discount rate, the lower the present value of the future cash flows. Typically 7% - 10% is a good range for most projects in today’s market conditions.

What is net present value (NPV) and how to calculate NPV

NPV is the sum of the present value(PV) of the future individual cash flows (including in flows and out flows).

NPV formula:

Here is an example, let’s use NPV to evaluate a 5-years project:
Initial investment at year 0 is $100,000, discount rate is 5% annually.
Annually profit from the end of the first year to the end of the fifth year is:

$20,000

$30,000

$30,000

$30,000

$25,000

At the end of third year, there is $5,000 maintenance expense.
Then the PV of each year is:

Year 0: -100,000

Year 1: 20,000/(1+0.05) = 19047.62

Year 2: 30,000/(1+0.05)^2 = 27210.88

Year 3: 30,000/(1+0.05)^3 – 5,000/(1+0.05)^3 = 21595.94

Year 4: 30,000/(1+0.05)^4 = 24681.07

Year 5: 25,000/(1+0.05)^5 = 19588.15

We get NPV by adding all PVs above from year 0 to year 5.
NPV = 12123.67

NPV and IRR

NPV tells how much value an investment or project will bring in.
If NPV > 0, the investment may be accepted.
If NPV < 0, The investment should be rejected.
Using NPV to determine an investment is certainly not enough. IRR (internal rate of return) will tell you the other side of the story. It gives you the rate of return, so can be used to compare different investments.